E9-25 Measuring and recording goodwill [10–15 min]
Potters has acquired several other companies. Assume that Potters purchased Kittery
for $6,000,000 cash. The book value of Kittery’s assets is $12,000,000 (market
value, $15,000,000), and it has liabilities of $11,000,000.
Requirements
1. Compute the cost of the goodwill purchased by Potters.
2. Record the purchase of Kittery by Potters.
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